In Dear Colleague Letter GEN-12-01, posted to the Information for Financial Aid Professionals (IFAP) Web site on January 18, 2012, we informed you of changes made to the Title IV student aid programs by the recently enacted Consolidated Appropriations Act of 2012 (Public Law 112-74). Among those changes was an amendment to HEA section 401(c)(5) that reduced the duration of a student’s eligibility to receive a Federal Pell Grant from 18 semesters (or its equivalent), to 12 semesters (or its equivalent). This change is effective with the 2012-2013 Award Year and applies to all Federal Pell Grant eligible students. It is not limited to students who received their first Federal Pell Grant on or after the 2008-2009 Award Year, as the HEA previously provided.

As noted in Dear Colleague Letter GEN-12-01, we will calculate the Pell Grant duration for a student by adding together each of the annual percentages of a student’s scheduled award that was actually disbursed to the student. For example, a student whose 2010-2011 Federal Pell Grant scheduled award was $5,550, but who received $2,775 because she was only enrolled for one semester, will have used 50 percent of that award year’s scheduled award. Similarly, a student who was enrolled three-quarter time for the 2011-2012 Award Year would have used 75 percent of his scheduled award. If these examples were for the same student and she did not receive Pell Grant funds for any other award year, her total Lifetime Eligibility Used (LEU) would be 125 percent.

We have begun the work needed to modify our systems. Until enhanced system functionality is in place for 2012-2013 Free Application for Federal Student Aid (FAFSA) processing, we have developed a set of interim processes for informing schools and students when a student’s prior receipt of Pell Grant funds could impact the student’s Pell Grant eligibility for the 2012-2013 Award Year.

Interim Reports to Schools

In mid-April, our Common Origination and Disbursement (COD) System will distribute to schools weekly reports that will include information on the school’s 2012-2013 FAFSA applicants who have received Pell Grant funding in excess of 450 percent. The report will include Pell Grant disbursements that have been reported to date by schools to the COD System, including for the current 2011-2012 Award Year and, any Pell Grant disbursements reported to the COD System for the upcoming 2012-2013 Award Year. Each school’s report will include only those students who listed that school on their 2012-2013 FAFSA. The report will be made available on a weekly basis on the COD Web site via the school’s COD Reporting Newsbox.

The inclusion on the report of students who have received more than 450% in Pell Grants will allow schools to be extra cautious when awarding students Pell Grants for 2012-2013. We chose “in excess of 450%” because, as noted, when we begin producing the reports, not all 2011-2012 Pell Grant disbursements will have been reported by schools to the COD System.

There are a number of possibilities that schools should consider when one of their students appears on the report, depending on the amount of the reported Pell Grant LEU:

Student not on report – A student for whom the school has received an Institutional Student Information Record (ISIR) is not on the COD report because the student’s Pell Grant LEU is between 0% and 450%. Even if such a student were to receive a full scheduled award for the 2011-2012 Award Year, he or she would still be eligible for a full 100% scheduled award for 2012-2013.

LEU greater than 450% but less than or equal to 500% - These students likely will have full eligibility for 100% of their 2012-2013 Pell Grant scheduled award, unless a later 2011-2012 disbursement moves their LEU to greater than 500%. For example, consider a student whose LEU reported on the COD report is 450%. Subsequent to the COD report being produced, a school reported to the COD System 2011-2012 disbursements for the student equal to 75% of the student’s 2011-2012 scheduled award. This would result in the student having received, through the 2011-2012 award year, 525% in Pell Grant funding. This student, therefore, would only be eligible for 75% of the 2012-2013 scheduled award.

LEU greater than 500% but less than 600% - These students will not have full eligibility for a 2012-2013 Pell Grant, but likely will have eligibility for a portion of that scheduled award. For example, a student whose LEU reported on the COD report was 566.6% would likely be eligible for 33.3% of the 2012-2013 scheduled award.

LEU 600% or higher - These students will have no Pell Grant eligibility for the 2012-2013 award year.

As noted, the LEUs reported on the COD report will not be the final LEU for the student through the 2011-2012 Award Year because of missing or late disbursements not yet reported by schools to the COD System. Therefore, to help themselves and their colleagues at other schools, we urge all schools to report all 2011-2012 Pell Grant disbursements and adjustments as promptly as possible.

Interim Communications to Students

In mid-April, we will begin sending e-mail messages to all 2012-2013 FAFSA applicants who appear to be Pell Grant eligible and who have COD System reported Pell Grant disbursements that are in excess of 450 percent of their Pell Grant lifetime eligibility. This process will be repeated weekly until July for FAFSA filers and for filers making corrections to their FAFSA information.

Future System Enhancements

COD System – In July 2012, the COD System will be updated to return COD Warning Edit 177 or 178 when a student’s LEU is near or exceeds 600%. We will also return the LEU in the Common Record Response and a new section will be added to the COD Web site to allow a school to view historical Pell Grant data for a student to determine how the LEU was calculated.

Note: Once the COD System enhancements are in place in July, the interim weekly reports will be discontinued.

CPS – In July 2012, the Central Processing System (CPS) will begin reporting Pell Grant LEU information on 2012-2013 ISIRs and Student Aid Reports (SARs) to alert schools and applicants who are close to or have exceeded 600% LEU based on prior Pell Grant disbursement history. To avoid making mid-cycle changes to the ISIR record layout, we will report this information using comment codes, as we have done in the past for other mid-cycle changes. Until these comment codes are in place, we will send e-mail notifications to students from the COD System informing them of the current Pell Grant eligibility status.

NSLDS – In July 2012, schools will be able to access the National Student Loan Data System (NSLDS) to determine what a student’s Pell Grant Lifetime Eligibility Used (LEU) is. Using the LEU from the COD System, the NSLDS will provide LEU information to the CPS via the pre-screening process and the post-screening process.

In July 2012, the COD System will begin to include the Pell Grant LEU on all Pell Grant records sent from the COD System to the NSLDS.

Detailed information about the system updates will be provided in forthcoming electronic announcements on the IFAP Web site.

Contact Information

If you have questions regarding the information included in this announcement, contact the COD School Relations Center at 800/474-7268 or by e-mail at CODSupport@acs-inc.com.